Paradox of thrift: what’s a poor consumer to do?

Paradox: n. a statement that is seemingly contradictory or opposed to common sense and yet is perhaps true

Poor: adj. impoverished, beseiged

Paul Krugman (Nobel prize-winning economist, Princeton professer, and liberal NY Times pundit) spoke to a packed house in Portland the other night as the first in our annual World Affairs Speakers Series.

The theme for this year’s series was supposed to be “The World in 2020” but Krugman rightly assumed that his audience was much more concerned about what was happening in the world in 2009, so he talked about the economic crisis.

He was funny*. And pessimistic. His basic message was that it sucks out there, everywhere – and that we have a right to be worried because we’ve never been in quite this sort of pickle. And furthermore, it’s a global crisis.

We poor consumers who have already lost jobs, health insurance, and homes  aren’t stupid. We tighten our belts, hunker down and dust off grandma’s formerly quaint advice on cooking dry beans and saving string.

But thanks to the “paradox of thrift”, our sudden crave to save is making the economy spiral down faster. If we don’t buy stuff, companies don’t earn enough money to make stuff, so they lay off workers – or they drop their prices to woo buyers, causing their competitors to do so as well which also leads to stuck inventories and laid off workers.

Giving us a tax credit or tax cut may put a few bucks in our pockets, Krugman says, but we use that to pay down debt, which doesn’t help the economy. We should be spending

(Didn’t we just try that?? like for the past couple of decades?)

If he were to advise Obama he’d tell him to make the stimulus package big enough… like about $2 trillion (!) because that’s what’s needed to get people working again so we can return to our spending ways. Unfortunately a ginormous stimulus package is a hard political sell.

Meanwhile, all the money I’ve saved from eating dog kibble the past few weeks just flew into my dentist’s pocket. It appears that kibble chomping can crack a tooth.

* Sample Krugman joke: “Capitalism is a system of exploitation of man by man. Socialism is the reverse.”

7 responses to “Paradox of thrift: what’s a poor consumer to do?

  1. Soak the kibble in warm water for a few seconds, just before eating. Makes it much easier to chew 😉

  2. Susan, thanks for the recipe. Too bad I didn’t have it BEFORE damaging my tooth’s root.

  3. So did you really have to visit the dentist? I had TWO root canals last year. I think my dentist was buying a new boat, or fancy car or something. When I was sitting in the chair just yesterday for routine cleaning, and he started looking for the next bad tooth, I told him absolutely not, we are not having any more tooth work this year, I’m paying for a new furnace. He laughed in that maniacal dentist way of his.

  4. This was a root canal. My first. The dentist said that the damage can have happened years ago – during an earlier kibble phase perhaps – or when I was on the pebble diet.

  5. Good joke, and Paul Krugman is obviously solvent – is he married? For that matter, is your dentist married? Although you may have put him off with your kibble-breath.

  6. I just found this site last night: and thought, just in case grandma didn’t leave enough recipes, you might like this source for bean recipes.
    instead of 365Pwords, she’s doing 365 bean words.

  7. Whoa – checked out the bean lady site. SO great. I’ll be trying her black bean burgers – and I’m afraid to look into the bread book…